Conn’s, the multiregional furniture, appliance and CE chain with 118 HomePlus stores, is getting its house in order.
After applying a tourniquet to its in-house credit business, the company kicked off its new fiscal year with a first-quarter profit of $12.7 million, compared with a year-ago loss of $2.6 million.
The period, ended April 30, represents the fourth consecutive profitable quarter for Conn’s, whose fortunes have upturned under chairman/CEO Norm Miller’s leadership.
“Our first quarter results reflect accelerating momentum throughout our business and we believe that fiscal year 2019 will be a strong year for the company,” Miller said in a statement, citing the credit segment’s declining delinquency rates and its first quarter of operating income in four years.
But with 71 percent of total retail sales financed with Conn’s credit last year, tighter lending policies continue to be a drag on revenue. Net sales, though trending higher, were down 1.3 percent, to $275.8 million, while comps declined 3.5 percent for the period. In fact, comp sales slipped in every category save for home office, which enjoyed a 13 percent surge after certain products were removed from the segment and reclassified as furniture/mattress.
Broken out by product segment:
- Home office unit volume increased 40.9 percent, partially offset by a 20 percent decrease in average selling price (ASP).
- CE unit volume decreased 4.4 percent and ASP decreased 0.1 percent.
- Major appliance unit volume decreased 6.1 percent, partially offset by a 1.8 percent increase in ASP.
- Mattress unit volume decreased 7.5 percent, partially offset by a 9.2 percent increase in ASP. and
- Furniture unit volume decreased 9.9 percent, partially offset by a 6.4 percent increase in ASP.
But retail gross margin hit 39.6 percent, a record for the first quarter, Miller said, and the comps were the best in eight quarters, with April representing the first month of positive same-store sales in over two years.
On the credit side, revenues rose 8.1 percent, to $82.6 million, and the company reduced its provision for bad debts by $11.8 million, thanks to a $13.8 million reduction in net charge-offs.
On the store front, Conn’s opened two new locations during the quarter, both in Texas, and plans to open between five and nine new stores in total during its current fiscal year, all within its current 14-state footprint.
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